Arcadia, the British retail group owned by the family of billionaire Philip Green, said underlying sales fell 3.7 per cent in the last 10 weeks, affected by unseasonably mild weather.

That was after the group, which owns the Topshop, Topman, Burton, Dorothy Perkins, Miss Selfridge, Wallis and Evans brands, had to rely on smarter buying to eke out a small rise in annual underlying profit.

“Trading conditions remain challenging,” the firm said today.

Arcadia made a profit before tax and one off items of £167.8 million in the year to August 31st, up from £166.9 million last year when profit had risen 25 per cent.

Britain’s retailers have generally enjoyed a better year as the economy moved back into growth, though a warm autumn has hampered some clothing chains’ ability to shift winter ranges and executives see continued pressure on consumers with wage rises lagging inflation.

Arcadia’s total sales rose 2.2 per cent to £2.74 billion, while like-for-like sales were down 2.7 per cent.

Retail margin was up 1.2 percentage points, reflecting better buying, including more buying from factories in the UK and Europe, tight management of stocks and less mark down.

A non-cash provision of £33.2 million was taken for onerous store leases.

Last year Mr Green sold a 25 per cent stake in Topshop/Topman to US private equity firm Leonard Green & Partners for £350 million, in a deal that valued those businesses at £2 billion.

The proceeds from that deal meant Arcadia ended the year with net cash of £74.7 million compared to debt of £308.9 million last year.

But for the eighth year running Mr Green did not pay a dividend. In 2005 he geared up the business to pay his Monaco-resident wife Christina, the ultimate owner of Arcadia, a £1.2 billion dividend.

Having opened 127 overseas franchise stores in the 2012-13 year, Arcadia plans to open 161 in 2013-14, including stores in Vietnam, Thailand, South Africa, Russia and Brazil.

Globally the group currently trades from a total of 3,045 stores. (Reuters)